David Bornstein Details the Power of Social Entrepreneurship -- A Path To Changing the World (Part One)

Social entrepreneurs ... create all sorts of structures – nonprofit, for-profit, social enterprises, which combine aspects of business and aspects of social organizations, and even innovative agencies or programs within government.

BuzzFlash is a huge admirer of David Bornstein's How To Change The World: Social Entrepreneurs and the Power of New Ideas (updated in a paperback edition released in August 2007), and we're not alone. We've recently seen two syllabi of college courses on social entrepreneurship, and both listed Bornstein's book as required reading. When the publisher, Oxford University Press, refers to the book as the bible on social entrepreneurship, they are not exaggerating.

Bornstein's in-depth profiles of nine social entrepreneurs (ten if you count Florence Nightingale) are inspiring and captivating. Bornstein gives insights into each innovator's early influences and the successes and setbacks of their various projects. Mini-sketches of other social innovators abound in the book, giving readers a really good sense of the range of personalities and initiatives in this burgeoning field of social entrepreneurship. In addition, Bornstein distills the qualities of social entrepreneurs and their enterprises so that readers come away with a conceptual framework of social innovators and their work.

Part 2 of this interview will appear next week, addressing the role of Ashoka in the development of the field of social entrepreneurship and the funding options of social entrepreneurs in the future.

* * *

BuzzFlash: Tell me a definition you like of social entrepreneurship.

David Bornstein: Well, everybody knows what an entrepreneur is – you know, somebody who starts something, gets something going. We think of them as someone who starts a business. It’s really someone who has an idea, brings together a group of people to make it happen, and creates new value in the world. And there’s a bunch of different roles that the entrepreneur plays. Someone sees something – the need to create something that doesn’t already exist and goes out and pulls together a group of people. So the entrepreneur acts like a kind of organizing force, like a magnet or a hub. They pull together people. And then figure out how to make an idea real, trying and failing, trying and failing, constantly ‘failing forward’ until they have found a new way of doing things – a newer and better way of doing things. So there’s initiation. There’s pulling people together. And then there’s, of course, iteration, continuous reworking and growth and marketing, of an idea, until it becomes a new model. The process is the same whether it’s for social good or profit.

BuzzFlash: In your book, you talk about the kind of social entrepreneurship that is transformative. And those are the kinds of social innovators that you have focused on. What are the most common misconceptions of social entrepreneurship and social entrepreneurs that you’ve encountered?

David Bornstein: Well, there are two very big misconceptions. The first one is a global misperception, which is that entrepreneurs only start businesses, and that the basic motivation behind the entrepreneur is the desire for wealth – personal wealth. There’s lots of research to show and I can speak from my own experience that that’s not the case. In fact, entrepreneurs are primarily motivated by the desire to build something. To see their ideas come to life. What has happened though in recent history – meaning the last couple hundred years prior to the last, say, twenty years, is that the most viable things for them to build have been businesses. Because the government or the church or the crown monopolies used to control everything socially. So that’s the first misconception – that entrepreneurs primarily seek personal wealth.

The second misconception is that social entrepreneurs run only businesses and that social entrepreneurship involves charging people fees for things the government or charities used to provide for free. That’s a false reduction. What you see today is that social entrepreneurs – and I write about them in How to Change the World and in my forthcoming book – create all sorts of structures – nonprofit, for-profit, social enterprises, which combine aspects of business and aspects of social organizations, and even innovative agencies or programs within government.

BuzzFlash: Give us some examples.

David Bornstein: Well, one of the most famous social entrepreneurs in the United States is Bill Drayton, who I write about in my book. He’s the founder of Ashoka, which is an organization that goes around the world looking for social entrepreneurs – people who have ideas to cause major social change, and who have the ability to transform those ideas into reality. And Ashoka invests in them by providing them grants when they’re at a relatively early and vulnerable stage, and also providing them with recognition and credibility and a wide variety of services to augment their impact.

With Bill, before he started Ashoka, what a lot of people don’t know is that he was, during the Carter Administration, the Assistant Administrator of the Environmental Protection Agency. And while he was there, he recognized that society needed a better way to control pollution. The old command and control model wasn’t working. And so he starting looking deeply into emissions trading. It wasn’t his idea. The notion had been around for a long time, but nobody had figured out the practical steps to make it a reality. Bill saw that if we could get businesses around the US, and eventually around the world, to see economic benefits from reducing pollution, that is, if they prevented pollution from going into the atmosphere, or any pollution sink, they could monetize it – they could capture some sort of a profit – that would accelerate the drive to advance pollution control technology. And Bill’s idea was called the Bubble. And it was a whole different way of regulating emissions. Initially, the model was used to curb acid rain – by allowing factories to trade credits earned by reducing sulfur dioxide pollution. But it wasn’t an easy sell. Everybody fought the idea tooth and nail. Businesses mistrusted it. Environmentalists mistrusted it. The government people didn’t like it. Everybody hates a new idea because it causes people to change the way they do things. People get vested in the existing systems because that’s where their competencies lie. So here’s an idea that Bill Drayton, a social entrepreneur, advanced while he was at the EPA within government. And it led to the first governmental legislation that permitted emissions trading. And that model led to dramatic decreases in acid rain in the United States during the 1990s. Emissions trading was also a centerpiece of the Kyoto protocol, the most prominent international framework to reduce global warming gases.

So Bill, working as a government administrator, had to push a new idea through government – one of the toughest change processes anywhere. He had to convince people to go with it. Had to convince the environmental activists that this was not an idea that would destroy the environment – that it was, in fact, a new tool that the environmental movement could exploit. Again, there was tremendous opposition. So there you see the role of the entrepreneur having to line up all these people across society in order to make an idea fly. Many economists had talked about emissions trading before Bill came along. But until he figured out all the details, it had never been put into practice on a large scale.

BuzzFlash: My reading of your book about emissions trading was the reason it was so successful was because the companies had a say as to what would be in their best interests, as well as in the environment’s interests, to deal with.

David Bornstein: Yes, exactly. The bubble changed the basic dynamic in pollution enforcement. For years, all major efforts to reduce pollution boiled down to arguments between lawyers. Companies would hire expensive lawyers and the government would hire other lawyers to fight them. And cases would sit in the courts for years. And Bill said: to reduce pollution, we need productive discussions between engineers, not arguments between lawyers. How do we give companies incentives so they will ask their engineers to spend their time thinking about ways to reduce pollution, rather than paying lawyers to resist the EPA? Companies can be very creative about fighting the government. And they can stonewall for years and years and years, and all the while, doing very bad things. But if you create these economic incentives, and then you create legislation to back up these incentives so that the regulations are enforceable and the caps get tougher over time, which is probably going to happen under Obama, you can see real traction. It certainly didn’t happen under George Bush. But it’s happening today in California. Europe has had a cap and trade system in place for a few years now. And what you see is that companies quickly start thinking: how can we change this process so that we can reduce emissions and claim carbon credits?

BuzzFlash: Why don’t you tell us about one of the other social innovators you profile in your book?

David Bornstein: A really great example is J.B. Schramm because his work is really bursting at the seams right now. J.B. Schramm, the founder of College Summit, started off as a teen counselor at a low-income housing complex in Washington, D.C. He saw that a lot of talented kids were falling through the cracks after high school, and weren’t going on to college. And he’s seeing that the low-income superstar students were flying off to college because the colleges were looking for low-income talent. And it was easy to identify with grades and test scores. But there was this whole middle tier of kids who were talented, and they were often better than their numbers suggested, and they weren’t going to college in anywhere near the numbers they should. J.B. would see them in the teen center, because he set up a tutoring program for them. He saw all these talented kids. He’d see them say in the summer, yeah, I’m going to college. Then in September, he’d see them hanging on the streets. And a year later, they were totally different people. They were not at all the exuberant young people he had known. The lack of opportunity to go to college was deadening to them in many cases. He said, we can’t squander this talent. So he started working within the teen center saying: what really does it take to get these kids to go to college? He saw that even though they had medium grades and test scores, they were often a lot better than their numbers suggested.

A lot of these kids had had tough lives growing up and more than their share of responsibility. Some of them took care of themselves, as well as younger brothers and sisters. Some cooked all the meals for the family. You’d see a kid with a B- or C+ average and think that that wasn’t anything special until you learned he was well respected at the supermarket where he worked 30 to 40 hours a week after school. And in some cases, the students showed real courage, as in the case of a student that J.B. knew who, after a shooting in the neighborhood and tremendous tensions between the parents and the police, actually organized a meeting between police officers and parents to reduce tensions in the community. And it worked. Now this showed leadership, but of course, none of that would be captured on his transcripts. So J.B. said: let’s create a system where these kids can show their talent to college admission officers.

So the first thing was to be able to teach them how to write an essay that would help them to tell their stories. The second was show them how to find financial assistance to go to college. Many of the kids whose parents had not gone to college didn’t have a college expectation. They didn’t even believe that it was within the realm of possibility. And the third thing was to help match these kids with schools where the kids really had a high probability of succeeding. Because certain kids would be lost in very large, impersonal colleges – ones who really needed a bit more hand-holding. On the other hand, for other kids, it would be better to get away from home, if the environment wasn’t supportive of their educational goals. Every situation was unique. Whatever the case there needed to be some thought given to this matching process. It had to be done, and it had to be done well. And the final thing was these kids needed some emotional support from one another, because most of them didn’t believe that they were college material. How to make that happen? And this was a bigger obstacle than many people understood. The lack of belief, the fear of stepping into the unknown, can lead a young person to self-sabotage themselves as they approach graduation. It may not even be conscious.

So he created a program. Initially it started as a summer workshop, a four-day summer workshop, where they would guide kids through the college application process. This is a process that normally takes eight months to complete, and he said: let’s try to compress the whole thing to four days, which required a Herculean effort. But the kids, it turned out, did very well. He called them “college summits,” and the first one was held in 1995. And 80% of those kids were accepted to college. And now statistically – this is from a group of kids – low-income – who enroll in college at the rate of about 46%. So this was dramatically higher. Now, if you go to college in the United States, you earn a million dollars more over your working years than if you've only graduated high school. So this was quite a big achievement.

Next he said: Let's do a few more. They basically went to 60 kids from 35, and then they went up to 90. Then they went up to 120. And now, twelve years later, there have been thousands of kids in the program. Now the work continues very intensively, working with entire school districts across the country in about six cities. They've gone in in a deep way with the majority of high school kids in those cities to try to make sure that the entire college-going culture in certain high schools gets fixed, now that they have the social technology to do this. And twelve years later, with thousands of kids, their college enrollment rates are just as high as they were when they started out. The kids stay in high school and graduate, so it's turned out to be one of those unexpected successes that everybody in education says is not really possible.

If you really boil down how this all happened, it was that an extraordinary number of ingredients had to be brought together and lined up in order to make this operation run like a well-oiled machine. That's the role that J.B. played. He pulled together hundreds of people. He brought them together and created the configuration where they could all use their talent to help other people unleash their talent. So it's one of those stories where it takes a village. But in order to build a village, you need somebody to sketch it out at the beginning -- where the village is going to be -- and get other people motivated to settle in that village, so to speak.

BuzzFlash: With people like J.B. Schramm and others you have talked about -- it's real easy to just see their work as pure success. But one of the things you delve into in your book is the setbacks that each of them faced and how they dealt with them. Why don't you talk a little about that?

David Bornstein: One of the things that is a characteristic of entrepreneurs is their response to failure. In fact, there's that famous quote from Thomas Edison where he says: "I didn't fail. I just found 10,000 ways it wouldn't work." I would say, if there's one thing that characterizes a successful entrepreneur over an unsuccessful one, it is that constant agility, that ability to constantly adapt to a new situation and recognize that the environment is not allowing you to do what you want to do. Rather than quitting, they see what variables can be changed to make it work in this environment. Entrepreneurs are very practical people. They don't complain about the government because the administration is not the administration that they would like. They try to figure out, how are we going to work with this particular group of people who think this particular way?

J.B. Schramm is a good example because his college summit was very successful both under the Clinton administration and George Bush's administration. They were able to work very successfully with people in Washington and with state and city level officials.

But an example of what might be considered success coming out of a sequence of "failures" would be if you look at the work of Fabio Rosa. This is a guy in Brazil who developed a system in the early Eighties -- more than a quarter century ago -- that was a very low cost way of bringing electricity at a 95% cheaper price than the government's distribution system, to millions of people across Brazil who didn't have electricity, which is most of the people in rural areas. Believe it or not, millions of people still do not have electricity in a very modern country with extremely sophisticated technology. In the cities most people do have electricity, but in rural areas it's still sporadic. They never had a New Deal. They never had a rural electrification administration like the United States.

So, Rosa had this technology. He spent years developing it. It was simple, it used a single wire, low-cost transformers grounded in the soil. He figured out a system where he could teach villagers how to chop down their own trees and wire the thing. It was like a Home Depot version of how to electrify your rural community. And when he brought the plan to the local farmers, most of them across Brazil were initially very skeptical. But then of course they liked it very much.

The first couple of times he tried it, he had to fight with the government. He had to fight with the electric companies. His funding was pulled. It took years to solve all these problems.

Eventually, he had a tech fight that was very successful when he was able to show that it worked. It spread some more. But when it looked like it was really going to spread big, the government administration changed and they switched their policies. The government spending policies, which financed hundreds of thousands of people's electricity, dried up basically because of a change in government policy. There were bureaucrats in the government who were trying to implement Rosa's approach without doing the hard work of going to the rural areas. They had failures and they caused the idea to lose its legitimacy for awhile.

All the while, Rosa plugged away. He worked with state governments. He worked with journalists to try to keep the political pressure up. And when the way was clearly blocked working with the government, he developed mechanisms using photovoltaic solar energy to bypass these blockages, sort of like a heart doctor will bypass a clogged artery. He'd bypass the government in many areas.

In recent years, Lula, the socialist president of Brazil, launched a program called "Luz Para Todos," which means light for all, which actually uses Rosa's methodology to bring electricity to everyone in Brazil within a five-year period. The methodology that Fabio Rosa developed in the early Eighties was called the 025 Norm, for those of you interested in details, and it's actually a government policy.

When Rosa looked at it, he was very excited by Lula's declaration. He thought it was terrific that it was happening. But when he looked at the government's policies and the details of implementation, he realized there were huge gaping holes in the government's ability to do what it said it was going to do. They basically didn't have enough people around the country who even knew how to deliver electricity using this very unconventional technology that Rosa had developed. It had taken him years to master it. Most of the government electricians were people that worked for the private companies and had been trained in conventional electrification and distribution.

Well, Rosa did the logical thing. He said if the government's going to be paying for this to be done, and there's all these people who don't know how to do it, what we need is training to teach them how to do it. He took it upon himself to set up the first training institute for alternative electrification distribution.

This was a new change to a story which was not in the original book, but it is in the updated version. Then Rosa also saw that another gaping hole in Lula's plan was that there were still people in these very remote areas that would not receive electrification through the government's model because it was too expensive to wire them up in the Amazon and other remote parts of the country. So he started developing methodologies to bring electricity to them using a combination of solar power and income-generation activity. He always packaged the two together so it made sense for people to invest. But if you look at his story, at one point, he described himself as a Sisyphus.